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Give step-by-step solution with explanation and final answer:Sandy and John Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2022, Sandy worked as a computer technician at a local university eaming a salary of $154,200, and John worked part time as a receptionist for a law firm earning a salary of $31,200. Sandy also does some Web design work on the side and reported revenues of $6,200 and associated expenses of $1,850. The Fergusons received $1,240 in qualified dividends and a $310 refund of their state income taxes. The Fergusons always itemize their deductions, get the full benefit of deducting the entire amount of state income taxes paid, and their itemized deductions were well over the standard deduction amount last year. Use Exhibit 8-10, Tax Rate Schedule, Dividends and Capital Gains Tax Rates, 2022 AMT exemption for reference. The Fergusons reported making the following payments during the year: « State income taxes of $4,950. Federal tax withholding of $21,000. « Alimony payments to Sandy's former spouse of $1100 (divorced 12/31/2014). « Child support payments for Sandy's child with her former spouse of $4,320. « $12,420 of real property taxes. « John was reimbursed $710 for employee business expenses he incurred. He was required to provide documentation for her expenses to her employer. « $3,600 to Kid Care day care center for Samantha's care while Sandy and John worked. « $16,200 interest on their home mortgage ($400.000 acquisition debt). « $3,330 interest on a $44,400 home-equity loan. They used the loan to pay for a family vacation and new car. « $16,100 cash charitable contributions to qualified charities. » Donation of used furniture to Goodwill. The furniture had a fair market value of $620 and cost $3100. a. What is the Fergusons' 2022 federal income taxes payable or refund, including any self-employment tax and AMT, if applicable? Note: Round your intermediate computations to the nearest whole dollar amount. rm——————]

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Give step-by-step solution with explanation and final answer:Uploaded ImageSandy and John Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2022, Sandy worked as a computer technician at a local university eaming a salary of $154,200, and John worked part time as a receptionist for a law firm earning a salary of $31,200. Sandy also does some Web design work on the side and reported revenues of $6,200 and associated expenses of $1,850. The Fergusons received $1,240 in qualified dividends and a $310 refund of their state income taxes. The Fergusons always itemize their deductions, get the full benefit of deducting the entire amount of state income taxes paid, and their itemized deductions were well over the standard deduction amount last year. Use Exhibit 8-10, Tax Rate Schedule, Dividends and Capital Gains Tax Rates, 2022 AMT exemption for reference. The Fergusons reported making the following payments during the year: « State income taxes of $4,950. Federal tax withholding of $21,000. « Alimony payments to Sandy's former spouse of $1100 (divorced 12/31/2014). « Child support payments for Sandy's child with her former spouse of $4,320. « $12,420 of real property taxes. « John was reimbursed $710 for employee business expenses he incurred. He was required to provide documentation for her expenses to her employer. « $3,600 to Kid Care day care center for Samantha's care while Sandy and John worked. « $16,200 interest on their home mortgage ($400.000 acquisition debt). « $3,330 interest on a $44,400 home-equity loan. They used the loan to pay for a family vacation and new car. « $16,100 cash charitable contributions to qualified charities. » Donation of used furniture to Goodwill. The furniture had a fair market value of $620 and cost $3100. a. What is the Fergusons' 2022 federal income taxes payable or refund, including any self-employment tax and AMT, if applicable? Note: Round your intermediate computations to the nearest whole dollar amount. rm——————]

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Asked by: Rahul kumar
Created at: 2025-09-29 06:53:35

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Let's break down the **Fergusons' 2022 federal income tax calculation step by step**. --- ## **Step 1: Calculate Gross Income** ### **Salaries** - Sandy: **$154,200** - John: **$31,200** - **Total Salaries:** $154,200 + $31,200 = **$185,400** ### **Other Incomes** - Sandy's Web design business: **$6,200** - Qualified dividends: **$1,240** - State income tax refund: **$310** - **Total Other Incomes:** $6,200 + $1,240 + $310 = **$7,750** ### **Total Gross Income** - $185,400 (salaries) + $7,750 (other) = **$193,150** --- ## **Step 2: Calculate Adjusted Gross Income (AGI)** ### **Less: Adjustments to Income** - **Alimony paid:** $11,100 (divorced before 12/31/2018, so deductible) - **Child support:** Not deductible - **Business expenses reimbursed:** Not income - **Net business income:** $6,200 (revenues) - $1,850 (expenses) = **$4,350** #### **Revised AGI Calculation:** - Salaries: $185,400 - Net web income: $4,350 - Qualified dividends: $1,240 - State tax refund: $310 - **Subtotal:** $191,300 - **Less Alimony:** $191,300 - $11,100 = **$180,200** --- ## **Step 3: Itemized Deductions** ### **State and Local Taxes (SALT)** - State income tax: $4,950 - Real property tax: $12,420 - **Cap at $10,000** (SALT limit) ### **Home Mortgage Interest** - $16,200 (on acquisition debt) - $3,330 (home-equity loan for non-qualified use **NOT deductible** after TCJA) - **Deductible mortgage interest:** $16,200 ### **Charitable Contributions** - Cash: $16,100 - Used furniture: lesser of cost ($3,100) or FMV ($620) = $620 - **Total:** $16,100 + $620 = $16,720 ### **Total Itemized Deductions** - SALT: $10,000 - Mortgage interest: $16,200 - Charitable: $16,720 - **Total:** $10,000 + $16,200 + $16,720 = **$42,920** --- ## **Step 4: Taxable Income** - AGI: $180,200 - Less: Itemized deductions: $42,920 - **Taxable Income:** $180,200 - $42,920 = **$137,280** --- ## **Step 5: Compute Regular Tax Liability** ### **Ordinary Tax** - Use **2022 Married Filing Jointly** tax brackets: - Qualified dividends ($1,240) are taxed at preferential rates. #### **Step 5a: Separate Qualified Dividends** - Taxable income: $137,280 - Ordinary income: $137,280 - $1,240 = $136,040 #### **Step 5b: Calculate Tax on Ordinary Income** - First $20,550 @ 10% = $2,055 - Next $62,000 ($83,550 - $20,550) @ 12% = $7,440 - Next $52,490 ($136,040 - $83,550) @ 22% = $11,548 - **Total ordinary tax:** $2,055 + $7,440 + $11,548 = **$21,043** #### **Step 5c: Qualified Dividends Tax** - All $1,240 falls within the 15% bracket (since total taxable income is below the 24% threshold). - Tax on $1,240 @ 15% = **$186** #### **Total Tax Liability (before credits and other taxes):** - $21,043 (ordinary) + $186 (dividends) = **$21,229** --- ## **Step 6: Self-Employment Tax** ### **Sandy's Net Business Income** - Net income: $4,350 #### **Calculate SE Tax:** - SE income: $4,350 × 92.35% = $4,017 - SE tax: $4,017 × 15.3% = **$615** #### **Deductible portion of SE tax:** - $615 ÷ 2 = **$308** - AGI adjustment: $180,200 - $308 = **$179,892** - Taxable income: $179,892 - $42,920 = **$136,972** #### **Recalculate Tax on Adjusted Taxable Income** - Ordinary income: $135,732; QD: $1,240 ##### **Ordinary Tax:** - First $20,550 @ 10% = $2,055 - Next $62,000 @ 12% = $7,440 - Next $52,682 ($135,732 - $83,550) @ 22% = $11,590 - **Total:** $2,055 + $7,440 + $11,590 = **$21,085** ##### **Qualified Dividends Tax:** - $1,240 × 15% = **$186** ##### **Total Regular Tax:** $21,085 + $186 = **$21,271** --- ## **Step 7: Add SE Tax** - $21,271 (regular tax) + $615 (SE tax) = **$21,886** --- ## **Step 8: Tax Payments and Credits** - Federal tax withholding: **$21,000** --- ## **Step 9: Calculate Tax Due or Refund** - Tax liability: $21,886 - Less: Federal tax withheld: $21,000 - **Balance due:** $21,886 - $21,000 = **$886** --- ## **Step 10: Alternative Minimum Tax (AMT) Check** - With high itemized deductions (SALT and mortgage), but not excessive, and taxable income below AMT exemption phase-out, **AMT is unlikely**. --- # **Final Answer** **The Fergusons' 2022 federal income taxes payable (amount owed) is:** \[ \boxed{$886} \] --- ### **Summary Table** | Step | Amount | |----------------------------|-------------| | AGI | $179,892 | | Itemized Deductions | $42,920 | | Taxable Income | $136,972 | | Regular Tax (with QD) | $21,271 | | Self-Employment Tax | $615 | | Total Tax Liability | $21,886 | | Federal Withholding | $21,000 | | **Tax Due** | **$886** | --- **Let me know if you need the completed tax form or further breakdowns!**

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